Thousands of vending machines can't accept Canada's plastic $20 bills

Thousands of vending machines still can’t digest those plastic $20 bank notes the government released two months ago, with machine owners blaming the Bank of Canada for their problems.

As many as half a million machines that scan bank notes needed reprogramming to accept the radically redesigned $20 bills, the most popular denomination in Canada.

Some 145 million polymer $20 notes have been put into circulation since Nov. 7, one of a series of new plastic notes intended to thwart counterfeiters and last much longer than their paper-cotton predecessors.

Kim Lockie has been converting his 1,200 machines in Fort McMurray, Alta., full-time for two months, but still has about 300 to go.

His unconverted machines, dispensing chips, candy, ice cream and even over-the-counter pharmaceuticals, are frustrating customers who can’t use their crisp, new bills.

“I would think less than half the machines in Canada would accept this bill right now,” says Lockie, the industry’s point man for the conversion project as an official of the Canadian Automatic Merchandising Association.

“As a small business, I am losing money.”

Lockie blames the Bank of Canada for failing to heed three years of warnings from owners that they needed a long lead time to recalibrate their vending machines before the official release of the new bills.

“The Bank of Canada didn’t really even talk to us in the last three years,” he said in an interview. “It seems like they have no desire to work with us…. Tough luck for our industry.”

Sabbir Kabir, a Toronto-based official of the Canadian National Vending Alliance, says his members — representing the nine biggest vending-machine operators — also report they were not given enough lead time to convert their scanners.

The customer gets upset very easily and he’s not going to come back

“The customer gets upset very easily and he’s not going to come back,” he said of the potential losses to the $5-billion-a-year industry.

The Bank of Canada rejects the criticisms, saying its officials have worked closely with the sector, providing vending-equipment manufacturers with sample bills months before the official release so they could create the right software.

“For the $20 note, these final notes were made available in May of 2012, fully six months before the notes were issued into circulation in November 2012,” said spokesman Jeremy Harrison.

“Eighty-five companies took advantage of the Bank’s offer, representing the vast majority of equipment manufacturers and suppliers to the Canadian market.”

Harrison notes the six-month lead time was twice as long as that provided for the previous series of newly designed bills, the so-called Journey notes released in 2004.

The bank has worked hard to help ensure that note-handling equipment is ready

“In short, the bank has worked hard to help ensure that note-handling equipment is ready for the new notes,” he said.

Each vending machine or other device that processes bank notes — such as self-serve checkouts, parking-permit dispensers and even ATMs — can require up to 15 minutes of reprogramming administered on site by a technician using a laptop.

The labour-intensive process is costly, time-consuming and follows weeks or months of software development, testing and training by manufacturers and service providers.

Lockie’s group had asked the Bank of Canada to release its new plastic $5 and $10 bills at the same time as the $20s to allow for a single recalibration visit to each machine. But the bank decided to issue the two lower denominations simultaneously later this year, forcing vending-machine owners to plan another round of site visits in 2013, absorbing the costs.

Kabir said some manufacturers were caught off guard when the Bank of Canada issued slightly different versions of the new $20 bank notes. The entire image is offset in one version — the Queen’s chin is marginally higher, for example — which can foil automatic scanners programmed to expect the non-offset version.

“The method used to cut the notes is different between the series and … (the offset) series note falls out of tolerance,” says an internal industry email obtained by The Canadian Press.

Members of Kabir’s alliance complained their reprogrammed machines still wouldn’t accept some of the new bills, and the offset problem was identified and fixed only in December, weeks after the new bills were on the street.

Harrison says the offset issue is being overblown.

“As with virtually any manufactured product, there are going to be subtle variations during production,” he said.

“In the case of bank notes, it is completely normal for various bank note production runs to have subtle, virtually imperceptible variations in some characteristics, within a very narrow tolerance range.”

The acrimony between the central bank and the vending industry is in sharp contrast to operators’ experience with the Royal Canadian Mint, which issued new loonies and toonies made of lighter alloys in April last year, says Lockie.

The mint treated the vending industry as a partner, he says, providing long lead times before issuing the coins, giving operators ample time to convert their equipment.

Canada’s paper-cotton $20 notes remain in circulation alongside the polymer notes for now, and reprogrammed cash-handling machines are able to handle both kinds.